Rebuild national resiliency to push recovery, growth

With Budget 2022 around the corner, taxpayers across different strata have expectations from the government to roll out financial relief in the form of rebates and incentives to tide over the losses resulting from the onslaught of COVID.

In the previous Budget, the main focus of the government was on health and rural infrastructure development. However, just as the country's economy was recovering, the emergence of the Omicron variant of COVID-19 has raised concerns on the same.

While the government has rolled out several policy measures to combat the economy, ranging from Production Linked Incentives Schemes (PLIS) to reduction in corporate tax rates to 15% for manufacturing, the upcoming Budget 2022 should focus on recovery, rebuilding national resilience to drive socio-economic recovery and national development. Specifically, the focus should be on the following expectations:

Raise deduction cap for interest on home loans

While the real estate sector is looking at a robust housing demand revival in 2022, there is an expectation that this Budget will play a supportive and enabling role to help the real estate sector tackle the COVID-led crisis that has crippled the sector. Some measures that may be considered to boost demand could be – increase in the interest deduction on housing loans taken by home buyers for tax rebate under Section 24(b) of the Act to attract more buyers. The other area could be in increasing demand for affordable housing. The government can consider increasing the current 'affordable housing' limit of Rs. 45 Lakh for claiming deduction under Section 80EEA of the Act, as this would expand benefits for home buyers and therefore boost the end-user demand.

Concessional tax rate of 15% for service sector

The service sector has been instrumental in opening up employment opportunities during the recent past and has been one of the major contributors to the GDP.

To encourage growth, concessional rate of tax at 15% which was given to newly set up manufacturing companies, can be extended to newly set-up service sectors. This would attract more investment into India and also trigger specific innovation services in the country.

S. Anantha Padmanabhan, Partner, Deloitte Haskins & Sells LLP

- Juhul Patel , Manager, Deloitte Haskins & Sells LLP